TN Budget: With No Innovative Measures to Increase Revenue, Debt Grows

Chennai: The interim budget presented by the AIADMK government on February 23 was sans any innovative measures to increase non-tax revenues. Thanks to the policies pursued by the Bharatiya Janata Party-led Union government, the state is loaded with financial burden and its debt burden is expected to cross Rs 5 lakh 70,000 crore in 2021-22.

In spite of being choked with financial burden and rising debt, the state finance minister chose not to be critical of the Union government on Centre-state finances. The undue delay in sharing of Goods and Sales Tax (GST) revenues with the state was hardly touched upon by the minister.

In fact, the government has reduced allocation for several key departments -- for rural development from Rs 23,161 crore to Rs 22,218 crore, for agriculture from Rs 6,991 crore to Rs 6,453 crore and for the fisheries department from Rs 1,229 crore to Rs 580 crore.

Ahead of the Assembly elections due to be announced soon, the All India Anna Dravida Munnetra Kazhagam (AIADMK) government has also resisted from announcing any welfare measures. There was no mention of the impact of the COVID-19-induced lockdown on the lives of workers from the unorganised sector and relief measures.

SHORTFALL IN REVENUES

The revenue of the state has taken a hit owing to the earlier economic slowdown and pandemic-induced lockdown.

Speaking on the financial squeeze being faced by states, economist Prof Venkatesh Athreya, economist, told  NewsClick: “The finance minister refrained from making comments on the Centre-state financial situation. There was no reference made to the comments made by the 15th Finance Commission also”.

The revenue from the cess and surcharge of the Union government has almost doubled in the last decade, which is being appropriated by the Centre.

 “The cess and surcharges are not shareable with the states and the unilateral decisions of the Centre are undermining the revenues of the state governments. The revenue from cess and surcharges has increased from around 10% in 2010-11 to more than 20% in the current financial year”, said Athreya.

The increasing debt of the state drew strong criticism from the Opposition. Dravida Munnetra Kazhagam (DMK) leader M K Stalin said:  “The financial management of the state government is so pathetic, even a new-born child has a debt of Rs 62,000 crore”. 

The DMK also released a detailed report based on the information from the Comptroller and Auditor General and the report of the 15th Finance Commission on the revenue shortfall and accused the Edappadi K Palaniswami regime for the rising debt. The party also accused the AIADMK government of making “false claims” on development.

DMK also claimed that the state had a cumulative revenue surplus of Rs 2,386 crore when the party demitted office in 2011, while the current deficit is pegged at Rs 1.31,000 crore.

DELAY IN RELEASE OF FUNDS

The Opposition also accused the Central government of violating the solemn guarantee given to states during the implementation of GST. But, the AIADMK government, an ally of BJP, has not been making any strong point against the continuing neglect of states, the Opposition added.

The GST dues for the state stand at Rs 12,263 crore, as per secretary of finance, government of Tamil Nadu. The state government has been repeatedly demanding release of these funds, but the delay has continued for reasons unknown.

The Centre has also not released Rs 4,845 crore for rural local bodies, as per the recommendation of the 15th Finance Commission. 

The Communist Party of India (Marxist), in a statement, also slammed the delay in release of Central funds.

‘The local bodies are gasping for funds, while the union government has refused to release the fund which is highly condemnable’,  the CPI(M) statement read. 

NO INNOVATIVE SCHEMES ON NON-TAX REVENUES

The state government has been longing for funds as tax revenues have fallen short in the recent years. The government is depending largely on borrowing for meeting the expenditure, instead of moving toward innovative schemes for generating non-tax revenues. The sale of liquor remains a major source of income to the state exchequer. 

“The government can utilise the mineral resources to generate revenue. But, such minerals are thrown away at a very low price and there is rampant corruption in the department leading to loss for the exchequer”, said Athreya. 

He said “the state government can follow the Kerala Infrastructure Investment Fund Board (KIIFB) to carry out development projects. No such proactive measures are happening to increase the revenue”.

Also, big announcements being made by the government are not reflecting either in the budget or on the ground.

“The allocation of Rs 5,000 crore for cooperative banks for farm loan waiver is insufficient compared with the waived amount of Rs 12,110 crore”, said Athreya. Also, the survival of the cooperative bank could be at stake if the allocation is further delayed.